Investors who wait are likely to pay more taxes than those who realize losses when they occur. So why do investors keep doing it?

December seems to be a magical month in the tax calendar. This is when the fairy godmother of taxes transforms investment losses into tax deductions. Act fast to realize losses, she says, before the clock strikes midnight on Dec. 31, when those tax deductions revert to rotten losses.

I would argue, however, that December offers no tax magic. Indeed, investors who wait until December before realizing losses are likely to pay more taxes than those who realize losses when they occur, months earlier.